Indian Government Is Encouraging Pharmaceutical Startups by Forming Relevant Policies and Initiatives

Nitin Konde, Apoorva Bajj

Jul 31, 2024 — 3 min read

Indian Government Is Encouraging Pharmaceutical Startups by Forming Relevant Policies and Initiatives

The pharmaceutical industry is one target of the Startup India Initiative, announced on January 16, 2016, to encourage investment and foster innovation across various sectors. The three main programs that make up the initiative are the Credit Guarantee Scheme for Startups (CGSS), the Startup India Seed Fund Scheme (SISFS), and the Fund of Funds for Startups (FFS).

The Startup India Initiative was initiated on January 16, 2016, to promote innovation and encourage investments across various businesses, including the pharmaceutical sector. The Fund of Funds for Startups (FFS), the Startup India Seed Fund Scheme (SISFS), and the Credit Guarantee Scheme for Startups (CGSS) are the three main programs that are included in this project.

The Biotechnology Industry Research Assistance Council (BIRAC), which falls under the Department of Biotechnologies, provides financial assistance through various programs and initiatives. Some of these programs include the Biotechnology Ignition Grant (BIG), Sustainable Entrepreneurship and Enterprise Development (SEED), and Launching Entrepreneurial Driven Affordable Products (LEAP) schemes. Each entrepreneur receives cash ranging from INR 30 lakhs to INR 100,00,000 which enables them to develop their concepts further, create proofs-of-concept, conduct pilot projects, and eventually commercialize their products and technology. Through the i4 program and the PACE program, BIRAC also encourages research and innovation in the field of biotechnology.

It is also important to point out that the Department of Pharmaceuticals has initiated a program known as the Scheme for Promotion of Research and Innovation in the Pharma-MedTech sector (PRIP). Under Component BIII of the PRIP program, twenty-five out of a total of one hundred and fifty research projects in the six priority areas that have been identified are for new businesses in the pharmaceutical industry.

There are a total of 1,40,803 companies that have been recognized as startups by the Department for Promotion of Industry and Internal Trade (DPIIT) as of the 30th of June 2024. Of them, 2,127 are from the pharmaceutical industry. There were 1397 start-ups in the pharmaceutical industry that were recognized by the DPIIT throughout the course of the past three years.

Future Plans

The government is currently in the process of implementing three flagship schemes as part of the Startup India strategy. These schemes are the Fund of Funds for Startups (FFS), the Startup India Seed Fund Scheme (SISFS), and the Credit Guarantee Scheme for Startups (CGSS). By these Schemes, assistance is provided to new businesses in all fields and industries, at different phases of their business cycle; this includes startups. Incubators are the distribution channel via which SISFS offers financial assistance to seed-stage entrepreneurs.

Updated Status of Schemes and Initiatives

In the fiscal year 2021-22, the initiative was initiated for four years, with a total capital of INR 945 crores. 205 incubators have been approved for a total of INR 862.84 crore under the SISFS programme as of the 30th of June, 2024. It is the Small Industries Development Bank of India (SIDBI) that is responsible for the operationalization of the Foreign Funds Service (FFS), which was intended to stimulate investments in venture capital. Alternative Investment Funds (AIFs) that are registered with the Securities and Exchange Board of India (SEBI) receive funding from SIDBI. These AIFs then invest in new businesses. As of the 30th of June 2024, 138 AIFs have been committed to receiving a total of INR 10,804.7 crore under the FFS. The CGSS is being introduced to make it possible for DPIIT-recognized companies to obtain loans without the need for collateral through approved financial institutions, also known as Member Institutes (MIs). The National Credit Guarantee Trustee Company (NCGTC) Limited is the entity responsible for the implementation of the system, which has been operationalized on a pilot basis since the first of April in 2023. As of the 30th of June in the year 2024, 182 loans with a total value of INR 426.09 crore have been guaranteed to startups that serve as beneficiaries. Through these initiatives, the government of India has demonstrated its dedication to establishing a vibrant environment for startup companies in the country.

During the past three years, the state of Uttar Pradesh has seen the establishment of 214 new industries that fall within the Pharma Sector. Of these, 176 units are operating in the medical device sector, while 38 units are operating in the drug and formulations sector.